British supermarket giant signaled that future profitability will be capped by investment

LONDON—Tesco PLC reported a small rise in adjusted profit for the year as the British supermarket giant logged stronger sales in the U.K. but signaled that future profitability will be capped by investment.

Shares fell 3% in morning trading in London as investors reacted to the cautious profit outlook, after Chief Executive Dave Lewis indicated Tesco is unlikely to hit current consensus profit figures.